Mechel Willing to Extract Coal in India

Russia’s Mechel is considering a stake in coal assets in India and building a plant there. Experts say Mechel’s ambitions are well-grounded as India is to be in shortage of 100 million tons of coal in five years. The projects demand sizeable investments but Mechel’s investment programs limit the company’s financial possibilities.

Mechel’s executive director Alexey Ivanushkin has said the company wants to expand its coal sale market, including deliveries of Yakutugol’s produce to India’s market. At the same time, Mechel is considering a stake in developing coal deposits in India as their privatization has started in the country. Mechel is ready to offer India latest mining technologies and take part in the construction of coal-mining plants.

India has primarily coal-based energy industry, and a shortage of coal in the country in 2011-2012 is to come to 100 million metric tons, according to McKinsey.

Industry experts say Mechel is taking a right decision making a move into India, an emerging market that may soon surpass China. Analysts say that Mechel may start business in the country with small mines or setting up joint ventures with Indian firms, proving its own technologies.

Other experts note, however, that the expansion will take up sizeable investments. However, the company’s financial possibilities are quite limited for the time being. Mechel already has a $1.1 billion-worth coal-mining investment program in Russia. $650 million alone will go to refurbish Yuzhny Kuzbass, Mechel’s largest plant.